--- title: "This Energy Stock is Primed for a Bounce-back" type: "News" locale: "en" url: "https://longbridge.com/en/news/293624439.md" description: "Amidst market volatility driven by tech struggles and Iran conflict-induced oil price swings, energy stocks are positioned for a rebound. While short-term prices fluctuate with geopolitical news, long-term forecasts predict higher average oil and gas prices due to inventory replenishment and supply disruptions. ConocoPhillips (COP) is highlighted as a top pick, offering a 2.9% yield and strong fundamentals, presenting a solid entry point for investors seeking longer-term returns in the energy sector." datetime: "2026-07-23T13:12:38.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/293624439.md) - [en](https://longbridge.com/en/news/293624439.md) - [zh-HK](https://longbridge.com/zh-HK/news/293624439.md) --- # This Energy Stock is Primed for a Bounce-back The market is confusing these days. The S&P 500 has moved sideways for the last two months amidst a slew of conflicting forces. The main culprit for the lack of direction is technology. That sector drove the market higher in April and May but has been the S&P’s worst performing sector since the AI trade began to stumble. Technology accounts for 40% of the S&P and the index is hard-pressed to move higher with that sector pulling it down. Other sectors had picked up the slack after the peace deal with Iran was announced as oil prices began falling in late May. Lower oil prices mean lower inflation and, ultimately, lower interest rates. Those things rising had held most Main Street company stocks back. The reversal of the trends induced a strong rally. But hostilities have resumed with Iran. Oil prices are rising again. And the non-tech rally has petered out. \[text\_ad\] But it’s earnings season. And it should be a great one. Analysts are expecting 23.3% earnings growth for the average S&P 500 company. If those numbers come to fruition, it will be the second consecutive quarter of 20%-plus earnings growth. Rarely do earnings grow so strongly in quarters not following a recession. High earnings growth is positive for the market. The market is hanging tough despite the technology stock struggles and rising oil prices. But the resilience could be because the high earnings expectations are already being priced into stocks. It may be that a stellar earnings quarter simply justifies current prices. Amidst the highly uncertain prognosis for most stocks, there is a sector on its own schedule – energy. ### **Energy Stock Rally Back On?** Most energy stocks are leveraged to commodity prices. And it’s been a wild year. The price per barrel of West Texas Intermediate crude oil began this year under $60. It soared to over $110 during the Iran conflict in early April. The price pulled back to less than $70 at the beginning of this month after the peace deal. But the price has spiked back to above $87 as hostilities with Iran have resumed. In the near term, energy prices will bounce around with news about the Iran conflict. If hostilities drag on, the price will likely rise. The end of hostilities will bring lower prices again. It’s anybody’s guess how things will unfold in the weeks and months ahead. But beyond the immediate price gyrations, the war has changed things. Before the war, the outlook for energy prices for the rest of this year and beyond was bearish. But that’s changed. Most forecasts are now calling for significantly higher average oil and gas prices going forward than were predicted before the war. And that was before hostilities resumed. Many countries depleted their oil inventories to ease the shock of supply disruptions during the war. Those countries will seek to replenish those supplies, and other countries will seek to establish inventories to prepare for future disruptions. There is currently a supply glut of oil from the release of all those ships from the Strait of Hormuz in June. But that supply will work through the market by the end of the month while demand continues to rise amid the replenishment of inventories and the summer driving season. There has also likely been a more permanent disruption from Middle Eastern oil supplies that the market will have to rebalance going forward. The war raised the trajectory of energy prices for long after hostilities end. And those higher projections don’t include a continuation of hostilities in Iran or further market disruption from the Russia/Ukraine war. The forecast is for higher prices than previously thought, with a significant risk of still-higher prices ahead. Meanwhile, the prices of most energy stocks have fallen significantly over the past couple of months. The current energy situation isn’t even the best reason to buy the best energy stocks. The current situation does, however, create a good entry point for stocks that should have solid longer-term returns. Here’s a good one to consider. ### **My Favorite Energy Stock to Buy Now** **ConocoPhillips (COP)** **Yield: 2.9%** Houston-based ConocoPhillips is one of the world’s largest independent exploration and production companies, based on production and proved reserves. They explore for, produce, transport, and market crude oil, bitumen, natural gas, and natural gas liquids in 14 countries around the world and have $124 billion in total assets. In terms of earnings, Conoco is evenly split between crude oil and natural gas products. The breakdown from last quarter includes crude oil (48%), gas (29%), natural gas liquids (18%), and bitumen (5%). The company operates in six different regions with most of earnings coming from the continental U.S. It’s essentially a U.S.-focused producer with global exposure. The longer-term trajectory for the company is excellent, and Conoco is far more resilient than most E&P companies in the near term. A substantial portion of premier acreage is in prime areas of the Permian, Eagle Ford, and Bakken basins with an average cost of production of less than $40 per barrel of oil. That is substantially less than the average price over the last 20 years and well below the average price this decade. The breakeven cost per barrel is around $34, which is well below the current consensus for midcycle expectations of the $60 to $65 range and rising. Conoco has a diverse product portfolio with the ability to ratchet up production when the prices rise and control costs when they fall. It has an enormous revenue base of $60.5 billion per year. This dependable cash flow limits the downside and provides strong leverage as a huge player in client negotiations. It has also averaged 8% revenue annual revenue growth over the last ten years. That’s a stellar number that includes the pandemic crash and far exceeds the peer average. In addition to the current positive energy stock environment, COP sells at a good price. The stock currently sells at just above 11 times forward earnings, light years cheaper than the overall market and well below the average valuation over the past several years. \[author\_ad\] ### Related Stocks - [COP.US](https://longbridge.com/en/quote/COP.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) ## Related News & Research - [Weiss Asset Management LP Invests $11.13 Million in ConocoPhillips $COP](https://longbridge.com/en/news/293843416.md) - [Rokos Capital Management LLP Acquires New Shares in ConocoPhillips $COP](https://longbridge.com/en/news/294053094.md) - [Stocks Pressured by Renewed US-Iran Hostilities](https://longbridge.com/en/news/294221798.md) - [Oil prices tumble after the US and Iran pause fighting over the weekend](https://longbridge.com/en/news/294218059.md) - [Gulf states back plan to let Iran collect voluntary fees to use Hormuz](https://longbridge.com/en/news/294051854.md)